Elections 2019: Here’s What Brokerages Made Of The Exit Polls

Indian equities opened higher as exit polls showed Prime Minister Narendra Modi’s coalition returning to power for a second term.

Here’s what brokerages have to say on exit polls:

CLSA

• Exit polls seem to indicate a much stronger mandate for National Democratic Alliance
• More outperformance is ahead for Nifty if exit poll predictions are right
• Risk of populism or fiscal worries will decline
• Reviving economic growth may not remain an urgent priority is the downside
• Valuations and the economic reality will likely cap near-term Nifty up-moves to 12,000 mark
• ICICI Bank Ltd., Axis Bank Ltd., HDFC Bank Ltd., Godrej Properties Ltd., Reliance Industries Ltd. and ITC Ltd. top picks
• Midcaps should be back in favour as mid-cap index price-to-earnings is now at 14 times, a five-year low

Goldman Sachs

• Potential reforms will be in land, labour, privatisation and export
• Expect Nifty returns to be largely driven by mid-teen earnings growth
• See 12-month Nifty target of 12,500 which is 12 percent upside
• See limited headroom for any significant re-rating on valuations
• Decisive mandate enables further progress on structural reforms
• Stock to play: ICICI Bank, HDFC Bank, State Bank of India, L&T, Adani Ports and Container Corp

HSBC

• Past exit polls have had a patchy record, Uttar Pradesh outcome remains uncertain
• May see a strong opening on Monday as markets were concerned on a broader coalition

JPMorgan

• A stronger victory for the NDA, beyond 290 seats, could however trigger a more robust response (3-5 percent)
• Any slippage in the number of seats for the NDA would, we believe, trigger a negative reaction

Morgan Stanley

• Exit polls have a mixed record, so the real deal is still May 23 when the actual results will be available
• Given what is priced in, stocks will likely rally on the back of the exit polls
• For the broad market, the chances are further skewed to an upward move
• If the actual results are a fragmented verdict then equities could take a meaningful hit

Kotak

• Exit polls ahead of pre-poll surveys in terms of seats for the BJP-led NDA coalition
• Economic growth revival will be the biggest objective and obstacle for the next government
• Next government to implement reforms to further improve “ease of doing business” in India
• Ultimate objective of next government would be increasing India’s investment rate and creating jobs

Nomura

• Exit polls suggest better-than-expected result for NDA, but near-term growth risks remain
• Rural reflation, infrastructure spending, streamlining of the goods and services tax, direct tax reforms and consolidation of public sector banks likely to be key priorities
• Do not foresee a major reversal of the current (weak) economic conditions in the short-term
• End of political uncertainty and policy continuity would be a medium-term positive
• Combined impact of weak global growth and tighter financial conditions due to shadow banking stress are set to moderate growth from 6.6 percent (YoY) in Q4CY18 to 6.2-6.3 percent in H1CY19 with risks tilted to downside